Copper fundamentals are among the strongest of all commodities. Demand has broadened with recovery in the industrial sector of the developed economies, but China remains the major consumer of global demand. China copper imports have slowed this year, but inventories at the Shanghai Futures Exchange have dropped by half, which indicates that China is going through another cycle of de-stocking. China has a history of moving between periods of de-stocking and re-stocking, and it is expected that re-stocking will return in the second half of this year.

Coal demand in the U.S. market has been improving since early 2010, and the outlook continues to be positive. First quarter 2011 production was up nearly 2 percent over 2010 on recovery in industrial sector electricity usage and a 15 percent increase in export volumes. U.S. coal exports were 81 million tons in 2010, and are expected to reach 100 million tons or more in 2011.

Japan is now an additional factor in seaborne coal demand. The damage to nuclear plants in Japan as a result of the earthquake has caused the indefinite shutdown of roughly 7 GW of electricity generation. An additional 6 GW of coal-fired generation is already planned to come on line between 2011 and 2020, and it is likely that previously shuttered coal plants will be reinstated to replace the lost generation from nuclear power.

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